Usual Suspects of Employment Loss: How Changes in Total Demand, Productivity, and Offshoring Relate To Declining Employment Trend in U.S. Textile Industry, 2002 - 2011

Zahra Saki

Abstract

A quick observation of the industry-level employment trends depicts a sharp decline in U.S. textile industry employment. While decreasing demand, increasing offshoring activities and productivity enhancements due to technological change are usual suspects of this drop, there is little evidence so far to reveal the combined impact of these factors on the U.S. textile industry employment. By developing an empirical model, this paper uses regression analysis to examine the role of foreign and domestic demand, labor productivity and offshoring, captured by both foreign affiliate employment of U.S. MNCs and imported intermediate inputs, in continued trend of domestic job loss in U.S. textile industry between 2002 and 2011. The findings partially support those in the literature that suggest offshoring activities have a negative impact on U.S. parent employment outcomes in manufacturing sector and textile industry in particular. I also find that decreased domestic demand is associated with lower U.S. textile industry employment; however, unlike the widely held view, exports and productivity do not have a significant impact on domestic employment in the U.S. textile industry.